![]() ![]() “The buyer wants to go out and actually see the lot and see with their own eyes if it’s more desirable or not and if they see the extra value or not,” Reeb says. Smart buyers look at lots in real life, not just online or on a map. “One of the ways that builders can control their pace of sales is by varying how much they charge for a home and for the most prime-premium lots versus the more standard lots,” Reeb explains. Builders also adjust premiums to speed or slow sales of homes in a community or match the pace of sales to construction schedules or simply to maximize profits. Physical characteristics aren’t the only factor. “You almost can’t price the prime lots high enough because that’s what everybody wants.” “You also have to factor in that the higher the price of the house, the more the buyers are going to want the best lot,” Reeb adds. Regardless of each lot’s specific attributes, the very best lots naturally command the fattest premiums, says Pete Reeb, principal at John Burns Real Estate Consulting in San Diego, Calif. Less Obvious Factors That Affect Lot Premiums Each direction might have a different premium assigned to it by the builder. Some buyers prefer a north-facing home others want a home that faces south, east or west. The direction a home faces can also be an important attribute. Is the road a single lane or three lanes in each direction? Is it an access road that goes into and out of the community or an internal road traveled only by residents? Is there a traffic signal? Is the lot on a corner? These and many other factors could affect the lot premium. Or it could be a busy street that is less desirable,” Hammond says. If there won’t be much traffic and you have a little extra land and (more) privacy, it could be a wash. “If a home has a road behind it, for example, that becomes a deterrent because you’ll have traffic. Lot Premiums: It’s All Pluses and MinusesĬhoosing a lot can involve making tradeoffs, says Irene Hammond, a Realtor at eXp Realty in Scottsdale, Ariz. A luxury home with an unobstructed ocean view might be priced at $2 million more than the same home across the street. Lot premiums can range from zero or a few thousand dollars to hundreds of thousands or even millions. Negative attributes might include the proximity of a cemetery, industrial park, heavily trafficked road or other undesirable land uses. Positive attributes might include a flat lot, corner lot, view lot, larger lot or cul-de-sac lot. “Is the view going to be stopped or will you see a wider range? Are you looking at a pond? A park? A golf course? You plus this and minus that and that’s what we add to the base price of that home.” “Let’s say one home is set further up than another,” Schumacher says. James Homes, a homebuilder in Glenview, Ill. ![]() How much more (or less) you’ll pay for a lot you like depends on the lot’s characteristics and how the builder adds the perceived value of those characteristics to the home’s price, says Priscilla Schumacher, director of sales and marketing at Edward R. Some lots may cost more than other, due to many factors. When you purchase a new home, you also purchase the lot that it is built on. ![]()
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